Dec 23, 2019

DraftKings going public via reverse merger

Dan Primack, author of Pro Rata

Illustration: Lazaro Gamio/Axios

DraftKings on Monday announced that it will go public via a reverse merger with a blank-check acquisition company called Diamond Eagle, with a sports betting tech platform called SBTech also being rolled in.

Why it matters: Sports betting is now legal in 11 states, with dozens of others considering legislation.

Big number: The combined company is expected to have an initial market cap of around $3.3 billion.

  • This includes just over $300 million in new investment from institutions like Capital Research & Management, Wellington Management, and Franklin Templeton.
  • DraftKings hit a peak valuation of around $2 billion in 2015, but later pulled back.

The players: DraftKings was a trailblazer in the daily fantasy sports market, regularly competing with FanDuel. The two companies sought to merge in 2016, but were ultimately blocked by U.S. antitrust regulators. FanDuel was later acquired by a publicly-traded Irish company, and now DraftKings has its own backdoor listing.

  • Diamond Eagle, led by veteran media executive Jeff Sagansky and advised by former MGM CEO Harry Sloan, went public earlier this year and says it has around $400 million in its trust account.
  • SBTech is a global provider of sports betting and online gaming infrastructure to online bookmakers.

DraftKings CEO Jason Robins will run the combined company, while his two fellow co-founders and SBTech management also will remain involved.

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